Now you can listen to our blog post, "How to Use Payday Loans Responsibly in…
Repossession: Voluntarily Surrender Your Car
Now you can listen to our blog post, “Repossession: How To Voluntarily Surrender My Car?” while on the go.
Although having a trustworthy automobile in your driveway can be tremendously beneficial, the loan you’re using to purchase it can be a significant financial commitment, especially when interest and other costs are factored in. Your loan payments will most likely be spread out over many years, depending on what you can afford, which might result in a large amount of unpaid debt, bad credit, and a perilous lack of savings.
In fact, if your debt becomes too huge to pay off and you are unable to make payments, your bank may repossess your vehicle to recoup their losses. While handing over the keys voluntarily can be inconvenient, it may make the process go more smoothly. Continue reading to learn about the advantages and disadvantages of voluntary auto repossession.
What Is Voluntary Repossession and How Does It Work?
If you’re considering financing any type of vehicle, keep in mind that you don’t possess the title until you’ve completed your repayment plan. Until then, if you miss too many loan payments, your bank, dealership, or other lender has the legal right to repossess and resell the vehicle. Voluntary repossession is when you return the car to them without them having to come to get it from you.
What Are Car Repossessions?
Voluntary and involuntary repossessions are the two forms of car repossessions. They both go through the same steps, but the main difference is how much effort you’re prepared to put in.
Repossession Against Your Will
If you don’t return the automobile on your own, your lender will have it towed away from your home or workplace. This is not only embarrassing, but it can also result in unwelcome towing charges. To minimise that kind of risk, it might be better to just drive right up to them and hand over the keys without a fuss.
All you have to do is notify them of your incapacity to pay your loan debt, then schedule a drop-off time and location. Some lenders may even arrange for the car to be repossessed by someone else.
What Is the Process of Car Repossession?
The lender will resell the car once it has been repossessed, whether voluntarily or involuntarily, to reclaim the money. They’ll next issue you a “statement of realisation,” which will specify how much the automobile was sold for and whether you still owe money.
When a lender resells an automobile, it may not be enough to cover the amount you owe on the loan. This is common due to the high depreciation rate of automobiles. The outstanding balance, also known as a shortfall or deficiency, must be repaid, together with any fees, penalties, or repossession expenses. If you relinquish the car voluntarily, you may be able to avoid repossession costs.
What Are The Advantages Of Surrendering Your Car Voluntarily?
Before we get into those disadvantages, let’s take a look at some of the benefits of voluntarily surrendering your vehicle:
- Prevent Fees: You can avoid some of the additional fees that your lender would charge you if they had to hire a repo firm to haul your car out of your driveway, which may happen at any time and without warning.
- Maintain A Positive Relationship With Your Lender: Because you’ll be willingly relinquishing your car, your lender may be more inclined to maintain you as a client in the future, as long as you pay back any remaining loan-related charges.
- There is no collection agency: Although your credit will be harmed whether you willingly return the car or not, the damage may be less severe if you miss fewer payments and the lender does not have to turn your records over to a collection agency.
What Are The Cons Of Surrendering Your Car Voluntarily?
Now that you’re aware of the significant advantages of returning your vehicle voluntarily, let’s look at some of the major disadvantages, such as:
- Penalty Fees: Just because your loan was voluntarily repossessed doesn’t mean it was forgotten. You’ll be charged not only penalty costs for any missed payments, but you’ll also be accountable for the difference between the remaining loan debt and the amount the lender resells it for, if at all.
- Car Resale Value: Because most automobiles degrade rapidly the longer they are driven, it’s unlikely that the lender will be able to resell the vehicle for a profit or break even. If you don’t pay the difference in a fair amount of time, they may turn the case on to a collection agency, which will exacerbate your financial difficulties.
- Wage Garnishment: If your debt is bad enough, the lender may try to sue you for the total owed, which can result in wage garnishment and other legal penalties, including bankruptcy in the worst-case scenario.
What Can You Do If You Still Owe Money After Repossession?
If you still owe money and can’t afford to pay it, you may be able to negotiate a payment plan with your lender. If you can’t make any payments, you can apply for bankruptcy or a consumer proposal. Both procedures will discharge the debt, but you must surrender the car before submitting.
What Can You Do To Avoid A Voluntary Repossession?
To summarise, while voluntarily surrendering your car can save you a lot of money in the long run, it can also have serious negative effects on your credit and your financial health. As a result, it might be in your best interests to avoid the procedure as much as possible. Here’s how you might be able to avoid a repossession entirely:
- Speak With Your Lender: Before you start defaulting on your loan, speak with your lender about the problem. They might be able to offer you lower payments, a payment delay, or a term extension.
- Refinance Vehicle: If those options aren’t available and your credit is still strong, you might be able to refinance the vehicle and obtain a new, more inexpensive loan arrangement.
- Budget: Create a proper budget, reduce your monthly expenses, or make more money with a second job or side business if your spending habits are the issue.
- Sell or Trade-in Your Automobile: If you have enough equity in your car, you may be able to trade it in for a less expensive model or sell it and use the proceeds to pay off your loan. If you don’t break even or make a profit on the sale, use your own money to make up the difference so you can transfer the title to a new owner.
Need Some Quick Cash? Let Us Help!
Are you struggling with your financial needs and need some extra cash? Lionsgate can help. Just fill out the form below, letting us know all your cash or mortgage requirements and we will find the best lender for you. Amazing thing? The process is free and you can quit it at any time.
We have a team of experts that analyze your requirements and pick the best lender for you, with prudent advice.
Note: Please give your authentic information while completing the form below.
If you found this article helpful, please share it with someone you care about. Also, visit our blog to read similar helpful articles on finance, real estate, and getting mortgages.